Forget pipelines, Canadian energy's real 'nemesis' is U.S. shale: Expert

Alberta’s decision to cut production levels in the wake of collapsing Western Canadian Select prices has given some lift to the commodity, but one expert says it won’t be enough to save the province’s energy sector.

“They really cannot compete with shale production in the U.S.,” Jeff Rubin, senior fellow at the Centre for International Governance Innovation, said in an interview Tuesday on BNN Bloomberg.

“That’s really the industry’s principal nemesis.”

Rubin is well known on Bay Street for his correct call for the price of oil to top US$100 by the end of 2010, but also for his subsequent incorrect call for oil to top US$200 by 2012. For a man who once had a reputation as being an oil “mega-bull,” Rubin expressed a downright pessimistic view of the oil sands’ future.

Speaking with BNN Bloomberg on the market dynamics for bitumen, Rubin said, “there is no demand in Asia, prices are even lower than here.”

And he’s not positive on the potential for greater crude-by rail capacity to aid the sector.

“Rail is a real expensive way to move oil – do you think these people have the margins for higher transport costs?” Rubin said.

As for the construction of more pipelines, Rubin says it won’t be enough. The energy patch is facing an “existential problem” that Rubin says can only be solved by a ban on fracking by U.S. President Donald Trump.

However, Rubin says there is opportunity for growth in downstream refining operations. Still, the bigger opportunity, in his view, is in shale gas.

“Canada’s greatest fossil fuel reserves or assets is not going to be oil sands at all, it’s going to be the Montney shale basin,” said Rubin, referencing the large sedimentary formation that straddles the Alberta-B.C. border.